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The World Slowly Waves “Good-Bye” To The Petro-Dollar

It has been the global use of the dollar to settle all OPEC oil trades using the U.S. dollar that has kept the dollar from losing its reserve status ever since Nixon closed the gold window in 1971. Essentially this factor has kept the dollar propped up for a lot longer than it should have been.

Many of us believe that defense of the petro-dollar has been one of the primary motivating factors behind the imperialistic aggression of the U.S. in both the Middle East (including Libya) and in non-NATO eastern Europe. For instance, it is well-known that Saddam Hussein was threatening to only accept euros for oil several months before the U.S. Government lied its way into invading Iraq and exterminating Hussein. Ditto for Libya.

As many of you are aware, China has been quietly and slowly advancing the use of the yuan to settle counter-party trades with many of its largest trading partners. Recently the yuan surpassed the euro as the second most widely used currency globally. China is also negotiating a massive ruble/yuan trade deal with Russia and is said to be discussing an oil deal with Saudi Arabia that would settle using yuan.

I bring this up because Reuters reported today that Russia is close to signing a $15-20 billion oil-for-goods deal with Iran – LINK. The two parties were forced into this deal because of U.S.-imposed economic sanctions on both countries. The irony in this is that in imposing its imperialistic will on the rest of the world, the U.S. is undermining its sole source of power – the reserve status of the U.S. dollar.

My personal belief is that the U.S. will find some excuse to trigger a global military conflict before allowing the final sequence of events unfold that would lead to a rapid collapse of the U.S. dollar. Let’s hope I’m wrong, but I always like to rest my views on historical precedence when it comes to judging and forecasting human activity, especially the behavior of those in control of empires. One thing we’ve learned for sure from history is that we never learn from history…

Good article, Dave. Many of us see the same thing as well. The handwriting is on the wall and this is going to end VERY BADLY.

Rust Cohle is very correct in his statement. The world is getting very tired of the US and the enforcement of its influence on the world. We’re going to be nothing more than a puppet to the EU if war breaks out with Russia.

There are many forces at work here. These forces will not let WWIII happen. Rumor has it there will be a global currency reset. Might create some temporary upheavals. Just don’t add to the fear-monger hype.

***Governor Jeremy Stein, my recent favorite Fed governor for his measured and thoughtful research on the Fed’s causing the mispricing of credit risk, submitted his resignation from the FED BOARD OF GOVERNORS (effective May 28). The professor is heading back to Harvard to spend more time with his students. NOT! It seems that Professor Stein is the odd man out and has lost the intellectual battle over Fed policy and the need for the Fed to evaluate financial risk in setting policy. As one of my key sources so aptly said: “The Last Adult Has Left The Room.” The resignation comes after a recent speech by Stein that evidently left him as a hater in a room of lovers. Jeremy Stein is a Fed Governor and not a district president so any dissension from him carries more weight than Richard Fisher. This is not an insignificant event and look for Jeremy Stein to raise his voice in criticizing the current Fed. He will do it through the research he alluded to in his recent speech about Financial Market Vulnerability (FMV). After the unemployment data is released tomorrow, I will watch to see if the Stein resignation has any impact on the market.